Reassuring The IMF.

Back in March, Prime Minister Shehbaz Sharif announced a fuel subsidy to provide relief for those who have been hit the hardest by rising inflation and while the initiative was taken in good faith, it led to talks with the International Monetary Fund (IMF) being stalled. Given that recent political developments have further amplified the risk of default for Pakistan, the government has not rolled back this decision in the hopes that it will bring us a step closer to securing the $1.1 billion bailout.

The fuel subsidy proposed charging affluent customers more so that money raised could be used to reduce the price of fuel for the poor. Not only would this have been unfeasible, but the policy lacked details on what the income cut: offs would be and how the government was planning on implementing it from one station to the next. Would it require proof via documents, involve restructuring the way fuel is sold, or would it give authority to individual stations who would have to observe, assess and act accordingly?

Perhaps it was a good thing that the proposed policy was still just an idea; rather a promise. Months later, it has been rolled back and negotiations between the IMF and the government have resumed. The...